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Measuring Quality of Life Under Spatial Frictions

Author

Listed:
  • Ahlfeldt, Gabriel M.

    (Humboldt University Berlin)

  • Bald, Fabian

    (European University Viadrina, Frankfurt / Oder)

  • Roth, Duncan H.W.

    (Institute for Employment Research (IAB), Nuremberg)

  • Seidel, Tobias

    (University of Duisburg-Essen)

Abstract

Using a quantitative spatial model as a data-generating process, we explore how spatial frictions affect the measurement of quality of life. We find that under a canonical parameterization, mobility frictions - generated by idiosyncratic tastes and local ties - dominate trade frictions - generated by trade costs and non-tradable services - as a source of measurement error in the Rosen-Roback framework. This non-classical measurement error leads to a downward bias in estimates of the urban quality-of-life premium. Our application to Germany reveals that accounting for spatial frictions results in larger quality-of-life differences, different quality-of-life rankings, and an urban quality-of-life premium that exceeds the urban wage premium.

Suggested Citation

  • Ahlfeldt, Gabriel M. & Bald, Fabian & Roth, Duncan H.W. & Seidel, Tobias, 2024. "Measuring Quality of Life Under Spatial Frictions," IZA Discussion Papers 17549, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17549
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    References listed on IDEAS

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    1. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2019. "The Costs of Agglomeration: House and Land Prices in French Cities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(4), pages 1556-1589.
    2. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
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    Cited by:

    1. Ssembajwe, Ronald & Mulinde, Catherine & Ddumba, Saul D. & Kagezi, Godfrey H. & Opio, Ronald & Kobusinge, Judith & Mugagga, Frank & Bamutaze, Yazidi & Gidudu, Anthony & Arinaitwe, Geoffrey & Voda, Mih, 2025. "Dynamics and associations of selected agrometeorological variables in Robusta growing regions of Uganda," Agricultural Water Management, Elsevier, vol. 307(C).
    2. Seidel Tobias, 2024. "Optimale regionale Transfers," Wirtschaftsdienst, Sciendo, vol. 104(11), pages 763-767.

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    Keywords

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    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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